deficient; and they say that, the Issue Department controls the circulation; therefore the Issue Department controls or regulates prices. But this is an unfounded theory, contradicted by all experience.

The Issue Department has no control whatever over the circulation, which is entirely under the control of the public, who may take as many or as few notes in exchange for gold as they please; and the prices of commodities depend on the supply and demand.

If the doctrine were true that, the Issue Department controlled the circulation, and also controlled prices, then the one doctrine would destroy the other.

But the doctrine being altogether wrong, the conclusions are wrong.

Supply and demand are always more or less affected by the money-market, which affects credit, and credit affects prices; but the solvency of the bank-note not being in question does not affect credit. That the Issue Department does very injuriously affect credit by restricting the issue of notes within too narrow limits has been too frequently proved by experience; but in no other way does this affect prices than by affecting supply and demand.

It is a fact not generally known, or, at least,

the consequences are not generally understood, that more gold is imported into this country than the country has any use for, and if the surplus quantity be not immediately exported, it is deposited in the vaults of the Issue Department. For the buried gold vouchers are given in the form of bank-uotes, and these, if not wanted, fall into the common reservoir of the Banking Department, and form its reserve. The bullion and the notes are then simply inoperative, waiting till wanted; or, the bullion is sent abroad, and notes for the same amount are cancelled.

Such being the simple facts, it is clear that, the Issue Department is merely a safe and convenient place for depositing the gold till it is wanted, and that the notes, which are issued as receipts for the gold, are but the vouchers for the quantity so deposited. Now, it is manifest that, the Issue Department does not keep these notes out of circulation, because they have never been in circulation.

The fluctuations, therefore, in the reserve of the Issue Department, to which so much importance is attached, simply and solely indicate the movements in the market of gold, and as the balance of trade in favour of England is almost always causing a flow of gold into England, there can be no ground for alarm with regard to a supply

of gold sufficient for all the purposes for which it can be required in this country.

In times of commercial difficulty the alarm is not for gold, but notes.

For nine-tenths of all the great commercial transactions of this country bills and cheques do the work, and gold and notes are little more than small change for the retail trade and payment of wages. For proof of this it is only necessary to enquire how the wholesale dealers make their payments, and how the clearing-houses settle them.

These enquiries will dispel many of the delusions about currency, by showing how small a portion of the currency of this country consists of gold and notes.

When this is shown and understood, but not before, the monstrous proposition of Lord Overstone, before the Select Committee of the House of Commons, on the 7th of July, 1857, will be fully exposed. Speaking of the Act of 1844, he said:"By this means effectual security is obtained that the paper money in the country shall at all times conform to what would be the amount of a metallic circulation. Of this there can be no doubt. The paper money of the country, under the Act of 1844, conforms strictly in amount and consequent value to a metallic cir

culation; those fluctuations in amount, and those only, which would occur under a present mixed circulation of gold and paper, as regulated by the Act of 1844."

Would Jones Loyd & Co. confirm this proposition? Would they say that, if Bank of England Notes were withdrawn, they would use as many sovereigns in their business as they now use notes,―sovereigns for notes, pound for pound?

In that case, a large establishment of carts and horses and trusty porters would be required for the carriage of the precious material, assuming that it would be found in sufficient quantity. But then, as now, the principal instrument of transfer would be cheques and bills, which rest on no such costly foundation as gold, but on the solvency of the issuer. It would be sufficient for him to get the gold when it was wanted; in the meantime his cheque or bill would fill the place of the bank-note; and if bank-notes were withdrawn, cheques and bills would fill their place, not gold.

But Bank of England Notes, carrying with them the stronger evidence of solvency, are, for general use, the more convenient and safer means of transfer than the cheque or bill, and to subject the more convenient instruments to the risk of scarcity when most wanted, by making their

numbers dependent on the demand for gold, is to subject those who want the notes and cannot get them to the risk of ruin, for the benefit of those who have been able to hoard the notes, or the gold which can command them.

This is an inevitable consequence of the Bank Act of 1844.

The trade in gold in England is carried on by Merchants, Brokers, and Refiners.

When there is no demand for export the gold is sold to the Bank of England, which is bound to purchase it at the rate of £3. 178. 9d. per ounce, standard.

The movements in the price of bullion are proportioned to the amount sent to the Bank.

The slightness in the variations in the price of Gold arises out of several conditions, the most important being that, the commodity and the money which pays for it, and in which its price is stated, are the same material. It is a mere exchange of gold for gold.

£3. 178. 10 d. in Gold Coin, will weigh one

ounce.

Again, the English Mint being free to coin the commodity into money without charge, a vendor not satisfied with the Bank price of £3. 178. 9d., and not having regard to the loss of interest during the operation, would send his bullion into